Sole Prop to C-corp - amend or terminate plan?

[Guest haydenks]

I have a client who incorporated mid-1998 from a sole prop. The client wants to continue the plan on behalf of his corporation. Does his Keogh Plan (P/S), a prototype, need to be terminated or can it be amended by restating it as a plan sponsered by a C-corp effective as of the day the business entity is changed? This question seems to come up quite often, but I can find no consistent answer.

Thanks for the help!

[Ervin Barham]

In general, the plan can be continued by having the corporation adopt the plan of a sole proprietor. However, I don't think you can retroactively go back to 1998 as the corporation must have adopted the plan by the calendar year end to make a contribution for 1998. I'm not a legal expert, however.

Check also with your prototype document provider. They should be able to give you some guidance.